Crowdfunding allows start-ups to collect small sums of money from many individuals as an alternative to a bank loan, still the main source of funding for small and medium sized companies.

“An EU crowdfunding license would help crowdfunding platforms scale up in Europe,” the EU’s financial services commissioner Valdis Dombrovskis said in a statement.

“It will help them match investors and companies from all over the EU, giving more opportunities for firms and entrepreneurs to pitch their ideas to a wider base of funders.”

The Commission set out a range of measures on Thursday to encourage growth and job creation in fintech to wean the region’s economy off its heavy reliance on bank funding, a core aim of the EU’s wider capital markets union project.

But the crowdfunding passport plan was the only one proposed as draft legislation.

Britain, a big fintech hub in Europe with its own crowdfunding licensing regime already, leaves the bloc next year and Brussels is keen to make the EU an attractive location for fintech firms. Without a favorable trade deal, UK-based fintech firms will not be able to serve EU customers from Britain.

“It’s more important that we develop capital markets across the EU as there are going to be consequences from the EU’s largest market leaving the EU,” Dombrovskis said.

There are no EU-wide rules for crowdfunding currently, meaning businesses and entrepreneurs have to deal with a patchwork of national rules, which can be costly.

The Commission’s draft law introduces an optional, pan-EU regime whereby a crowdfunding platform that wants to operate across the bloc could obtain a “passport” license from the European Securities and Markets Authority.

“Instead of having to comply with different regulatory regimes, platforms will have to comply with only one set of rules, both when operating in their home market and in other EU member states,” the Commission said.

“For investors the proposal will further provide legal certainty as regards the applicable investor protection rules.”

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European consumer group BEUC said EU licenses should be mandatory to avoid confusion for consumers.

“Creating a purely optional license for crowdfunding platforms will not set a minimum standard for investor protection across the EU,” BEUC Director General Monique Goyens said.

“On the contrary, doing this could provide a route for platforms to dodge stronger rules that are in place in some member states,” Goyens added.

The draft rules cover crowdfunding “campaigns” of up to a million euros over 12 months. Raising higher sums would come under the bloc’s existing prospectus and securities rules.

EU states and the European Parliament have the final say on the proposals.

Given there are parliamentary elections next year, the crowdfunding law is unlikely to take effect before late 2022, Linklaters lawfirm said.